Trump Administration halts four student debt forgiveness plans

The Department of Education halted enrollment in four popular federal student loan repayment plans. The affected initiatives offered beneficiaries affordable payments as well as a path to possible ultimate forgiveness of the loans.

Last February, the Eighth Circuit Court of Appeals extended the validity of an injunction preventing the department from continuing with Biden's SAVE plan, approved in 2023. This initiative was one of the Democrat's last attempts to circumvent the Supreme Court ruling that struck down his flagship student loan forgiveness bill.

Following the ruling, Education proceeded to remove the online and paper application forms for all IDR plans, which include income-based repayment, income-contingent repayment and payment based on your income and family size.

More than eight million affected

The measure affects more than eight million borrowers, who are immersed in forbearance that pauses interest and payments. However, it also halts the clock on student loan forgiveness for IDR plans, and halts Public Service Loan Forgiveness, a related program that facilitates student loan forgiveness in as little as 10 years for nonprofit workers and government employees.

But the latest ruling may have even greater consequences, as the court expressed doubts about student loan forgiveness at the end of the 20- or 25-year term under the ICR and PAYE plans, which were established under the same statute passed by Congress in 1993. The ruling thus calls into question three decades of guarantees that borrowers received through regulations, student loan agreements and public guidance on the right to loan forgiveness at the end of the term. The 8th Circuit left in place the IBR plan, which was created by Congress separately and is not being challenged, as well as PSLF.

No instruction has been provided from the Department of Education to those affected of how long the pause will last. According to The Washington Post, which claims to have had access to an agency memo, the processes could be suspended for 90 days or even longer....